Escalation in Trump tariffs looms over US-China trade talks
May 13 2019
The U.S. collected about $23 billion in tariffs on Chinese goods in calendar year 2018 - far more than any other country, according to the U.S.
Chinese producers said the abrupt tariff hike announcement wreaked havoc on operations and would bring high costs, layoffs and further shifts of production to Southeast Asia. They broke the deal.
It comes as high-level officials from both sides are attempting to salvage a trade deal in Washington.
China has disputed Trump's characterisation that the country reneged.
A Chinese national flag flutters outside the headquarters of the People's Bank of China, the Chinese central bank, in Beijing, China April 3, 2014.
In an interview with reporters later in the day, Vice Premier Liu He said: "We will make no concessions on matters of principle". China's GDP could fall by some 1.6 percent this year if punitive tariffs continue to squeeze Chinese companies out of American markets, the International Monetary Fund estimates. Hong Kong's Hang Seng Index plunged 2.4% to 28,311.07.
Gary Shapiro, president and CEO of the Consumer Technology Association, said "implementing these 25 percent tariffs on just five-days notice would roil our markets, damage US businesses and do serious harm to Americans' retirement funds and pensions". Overall U.S. exports to China rose 15% in March to $10.53 billion, while imports from China fell 1.2% to $38.8 billion.
What will be the impact of the tariff rise?
For the USA, although macroeconomic data shows that its economy is growing faster than expected, dividends of tax cuts would fade away in the long run, and trade protectionism would have negative impacts on its economic performance.
"We could have made a quickie, but we're in a very good position", Trump said in April, one of several times he has touted the USA economy as leverage for a deal.
Deborah Elms, executive director at the Asian Trade Centre, said: "It's going to be a big shock to the economy".
Companies shipping a range of products from seafood to furniture are among those in the firing line as the economic superpowers try to resolve a trade war that has seen both sides impose levies on hundreds of billions worth of goods.
He noted that "the two sides failed to realize that they have very different tolerance for transparency". The U-turn in Trump's attitude looks more like a tactic created to increase leverage and to show the "art of the deal" as a businessman. But Trump changed his tone on Thursday with a tweet saying he had received a "beautiful letter" from Chinese President Xi Jinping.
President Donald Trump is threatening to boost tariffs Friday on imports from China from 10 to 25 percent if a deal isn't reached by Thursday night.
They will nearly certainly have to pass on that cost to American consumers - and that means higher prices.
Treasury Secretary Steven Mnuchin, right, greets Chinese Vice Premier Liu He as he arrives for trade talks between the United States and China at the Office of the United States Trade Representative in Washington, Thursday, May 9, 2019.
This means the rest of us should be prepared for more pain ahead.
US Trade Representative Robert Lighthizer released an official notice on Wednesday making the tariff increase a virtual fait accompli.
Chinese state media on Thursday published and aired reports quoting US -based organisations and individuals critical of Trump's decision to raise tariffs, though playing down the impact of higher USA tariffs on the Chinese economy.
Even though there had been growing optimism about progress in trade talks recently, sticking points have persisted throughout. Tariffs can put us all at serious risk of a global recession due to tighter financial conditions and weaker global growth.
Analysts say the Chinese are still willing to negotiate to retain the moral high ground and because they recognise the importance of solving the trade war.
In currencies, the yen had surged to a three-month high against the dollar and the Swiss franc was at a three-week high as investors anxious about an escalating trade conflict.